CONTENTS Statement of— Baker, Clarence P., Jr., former licensed grain inspector, Destrehan Bell, Murray, former employee, U.S. Department of Agriculture, Page 59 141 Clark, Hon. Dick, a U.S. Senator from the State of Iowa.. 5,85 165 3 157 71 Gallinghouse, Gerald J., U.S. attorney for the eastern district of Guillory, J. Mason, chairman, executive committee, New Orleans 5 162 Heusel, Cornelius R., Jr., first assistant U.S. attorney for the eastern district of Louisiana.. 23 Huddleston, Hon. Walter D., a U.S. Senator from the State of Humphrey, Hon. Hubert H., a U.S. Senator from the State of Min nesota Johnson, Robert, former licensed grain inspector, Destrehan Board of Ryan, Harlan, field office supervisor, U.S. Department of Agriculture, Skeels, Bradley T., former employee, U.S. Department of Agriculture, Young, Hon. Milton R., a U.S. Senator from the State of South Miscellaneous documents "Cover-Up by USDA Told in Grain Probe," article from Des Moines Report of investigation of apparent violations of U.S. Grain Standards Letter from Irving W. Thomas, Director, USDA Agricultural Market- 86 105 143 3 46 78 121 127 165 GRAIN INSPECTION THURSDAY, SEPTEMBER 25, 1975 U.S. SENATE, SUBCOMMITTEE ON FOREIGN AGRICULTURAL POLICY COMMITTEE ON AGRICULTURE AND FORESTRY, The subcommittees met, pursuant to call, at 10.10 a.m., in room 3302, Dirksen Senate Office Building, Hon. Hubert H. Humphrey (chairman of the Subcommittee on Foreign Agricultural Policy), presiding. Present: Senators Humphrey, Huddleston, Clark, Young, and Dole. STATEMENT OF HON. WALTER D. HUDDLESTON, A U.S. SENATOR FROM THE STATE OF KENTUCKY Senator HUDDLESTON [presiding]. The committee will come to order. Today's hearing is the third instance in which these two subcommittees have met to hear testimony on alleged improprieties in the system of inspection of grain for export and domestic sales. Our first two hearings have developed important testimony which was of great help to the Committee on Agriculture and Forestry in our deliberations on Senate Joint Resolution 88, which is now on the Senate calendar, to take many of the immediate steps necessary to improve this system. It is my hope that today's hearing will develop further evidence which will assist these subcommittees and the Congress in finding the permanent legislative solutions necessary to assure the long-term integrity of our grain marketing system. Senate Joint Resolution 88 makes important temporary changes, and those permanent changes which are readily apparent, in our grain inspection system. Taken as part of an ongoing effort, this legislation will give the Secretary of Agriculture much needed authority to bring about rapid improvements in grain inspection. I am hopeful that the Senate will give swift approval to this legislation, and that the House will give its final passage within the next several weeks. But our subcommittees have an obligation not to rest on this first accomplishment, and to go forward with permanent legislation which will restore the integrity which has been called into question. Among the questions which remain to be resolved is that of the structure of inspection-whether it will be all Federal, State-Federal, or continued State-private with increased supervision. An alternative which I have proposed is embodied in S. 2326, which would require original inspection by Federal inspectors at export points, but leave interstate inspection in the hands of States and licensed inspection agencies. It would make other important changes in the U.S. Grain Standards Act which are designed to safeguard the interests of producers and users of grain. The testimony which we hear today, and the ongoing investigations by the General Accounting Office and the Agriculture Committee staff, will be providing helpful information to these subcommittees. We need to make certain that our entire system of grain marketing from point of first sale to its ultimate use, either in this country or in another land-is as good as is humanly possible. We need to be assured that the best and most economic technology is available, so that the quality of grain is protected throughout the transportation system, and that its movement and handling is as efficient as possible. And we need to assure that producers and consumers alike receive the best bargain possible-that the farmer is paid the true worth of his product, and that the user can buy it at a fair price and, above all, we need to assure our customers, both in this country and abroad, of the integrity of our system. Senator Humphrey has joined us. Senator, I am glad you could be here. Senator HUMPHREY [presiding]. Thank you very much. To date, we have concerned ourselves in this subcommittee relating to the hearings on grain inspection, mainly with the needed legislative changes with regard to grain inspection practices. Although this area has not been completed, and the General Accounting Office will not have completed its investigation until about February 15, we have in the subcommittee and in the full committee completed our work on temporary or interim legislation, known as Senate Joint Resolution 88. That resolution has now been reported to the full Senate and is on the calendar for legislative action. That particular piece of legislation will strengthen the hand of the Secretary of Agriculture and the proper officials in the Department. It not only gives them what we think is an additional authority, but it is a directive to utilize the authority that is already on the lawbooks. Today we will be looking at some of the practices which prevail in the grain inspection operation. We have leading off as the first witness the Honorable Gerald J. Gallinghouse, the U.S. attorney from New Orleans who has led the investigation effort in that very significant port. We will certainly wish to draw on the experience of Mr. Gallinghouse in this effort, in order to gain a better understanding and perspective as to how these practices have developed and evolved. We will also certainly wish to obtain his views with regard to our interim legislation which we have developed and which I have referred to as being reported. In addition, we would certainly appreciate having the advice and counsel of Mr. Gallinghouse regarding the kinds of long-term changes in our permanent legislation which are needed to prevent recurrences of the same problems in the future. Mr. Gallinghouse, I am sure you understand that we have two stages here; the interim legislation and then working towards the complete restructuring of the Grain Inspection Act. We will obviously be interested in Mr. Gallinghouse's suggestions regarding specific proposals with regard to the area of criminal penalties. There has been a great deal of commentary about the system and the opportunity to be able to get around its provisions. If this is the case, we must then look very carefully at the penalties which we provide to make certain that they do serve as an adequate deterrent. We are also obviously interested in the observations that Mr. Gallinghouse may have with regard to the cooperation which he has received in his investigation from other agencies of the Government, such as the Department of Agriculture, the Federal Bureau of Investigation, the Department of Justice, which you represent, and our own committee. I also wish to welcome our other witnesses, Mr. Clarence P. Baker, Jr., of New Orleans, and David B. Frey of Topeka, Kans. Both are former employees of the Destrehan Board of Trade, and I am hopeful that they, too, can shed light on the inspection system. Our first witness today will be Mr. Gerald J. Gallinghouse. I understand that you have an associate with you, Mr. Heusel, who is the first assistant U.S. attorney for the eastern district of Louisiana. I believe, Senator Young, that you had a comment. STATEMENT OF HON. MILTON R. YOUNG, A U.S. SENATOR FROM THE STATE OF NORTH DAKOTA Senator YOUNG. Yes. I am deeply concerned and interested in these hearings and in doing something about this problem of grain inspection. We had a problem back in 1960. I remember being on the subcommitte and for awhile we got it corrected, but our farmers cannot understand why the pure grain that goes to the country elevator is contaminated and slugged, so to speak, with foreign materials when it reaches the export market. This is a terrible situation which must be corrected. I remember at that time one of our real problems was at New Orleans port. More grain was slugged there than probably any other place. I hope this will be corrected. It certainly needs to be. Senator HUMPHREY. Senator Dole. STATEMENT OF HON. ROBERT DOLE, A U.S. SENATOR FROM THE STATE OF KANSAS Senator DOLE. Mr. Chairman, you have covered many of the same points that I would raise. I have reservations about the 12-month authority when we start hiring personnel on that basis as we have made it clear that it is interim legislation and that we will follow up with permanent legislation. I also have some reservations about total Federal inspection. Maybe a third party system with some Federal appeal procedure might be in the best interest of the producer and the trade. |